Bisousatoi Corporation needs RM5,000,000 for its business expansion in Singapore. The firm can raise funds by issuing bonds with a 10 percent coupons. The bond's maturity is ten (10) years, and the floatation cost is 5 percent of the market value of RM950. The current tax bracket of the firm is 25 percent.

Required:

Determine the after-tax cost of the bond.

Answer rating: 100% (QA)

To determine the aftertax cost of the bond we need to calculate the net proceeds from issuing the bo... View the full answer